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Punjab unveils policy to bail out major loan defaulters

Punjab unveils policy to bail out major loan defaulters

The Punjab council of ministers on Monday gave its approval to bring a liberal one-time settlement (OTS) policy-2015 for the settlement of dues worth several hundred crores of rupees that many companies and individuals owe to the Punjab State Industries Development Corporation (PSIDC), Punjab Financial Corporation (PFC), Punjab Agro Industries Corporation (PAIC) and its subsidiary corporations.

chandigarhUpdated: Aug 04, 2015 10:53 IST

HT Correspondent

Hindustan Times

The Punjab council of ministers on Monday gave its approval to bring a liberal one-time settlement (OTS) policy-2015 for the settlement of dues worth several hundred crores of rupees that many companies and individuals owe to the Punjab State Industries Development Corporation (PSIDC), Punjab Financial Corporation (PFC), Punjab Agro Industries Corporation (PAIC) and its subsidiary corporations.

Long-pending bad loans as old as two decades are to be paid back to these public sector undertakings (PSUs), especially to the PFC, that has already fallen sick and is on the verge of disinvestment. Many of these defaulters have not been penalised.

The decision means that those who had already missed the earlier 2009 deadline to settle their loan dues would not be booked as defaulters, for the time being.

"Those who opted for the 2009 policy and became defaulters would also be eligible under the new OTS. Under the policy, in equity investment cases, OTS settlement shall be at the "amount invested plus simple interest at the rate of 10%," the cabinet note said.

"In the loan cases, the OTS amount would be calculated based on the outstanding (principal plus interest) amount to be frozen as on the date of default plus 10% simple interest (on frozen amount); in loss assets cases, the OTS settlement shall be at the outstanding principal amount plus expenses only," the note said.

Under this policy, besides hundreds of small-scale industrial units financed by the PFC settling their accounts and getting revived, around 70 large and medium scale industrial projects of the PSIDC, along with around 15 industrial projects of the PAIC, are likely to be revived. The PFC, PSIDC and PAIC are expected to effect recovery to the tune of Rs 50 crore, Rs 200 crore and Rs 25 crore, respectively.

The cabinet meeting, presided over by chief minister Parkash Singh Badal, also gave its nod to promulgate the Punjab Protection of Interests of Depositors (in Financial Establishments), Ordinance, 2015. This would help the government take steps to check fraudulent financial tradings in the state, a spokesman said on Monday.